Sponsor demand drives Q2 cat bond issuance to $5.2bn: Report

Demand for reinsurance and retrocessional protection from cedants, as well as a slew of new first time market entrant sponsors, have helped the global catastrophe bond market execute on $5.2 billion of new issuance in the second-quarter of 2022, according to Artemis’ latest quarterly report.

The Artemis Q2 2022 Catastrophe Bond and related insurance-linked securities (ILS) Market Report, available to download now, examines the almost $5.2 billion of risk capital issued in the quarter.

Catastrophe bond market activity in the second-quarter of 2022 was dominated by issuance of full 144a property catastrophe risk deals, accounting for the majority, just over $4.9 billion of the issuance Artemis recorded in the period.

This reflects a challenging reinsurance market environment, as well as demand from new market entrants as first time sponsors.

In fact, we recorded seven new catastrophe bond sponsors coming to market in Q2 2022, as new entrants looked to the capital markets to fill their reinsurance and retrocession needs, at a time when re/insurer risk appetites to retain nat cat risk have declined.

24 catastrophe bond transactions, comprised of 35 tranches of notes, provided reinsurance or retrocession protection against a variety of perils for sponsors during the second-quarter of 2022. When combined with the three private ILS deals, Q2 2022 issuance reached approximately $5.2 billion.

While this was a decline on last year, it was still the third-strongest Q2 of cat bond issuance we’ve ever recorded, making first-half 2022 issuance very strong again, at almost $8.7 billion.

Issuance of new catastrophe bonds in the second-quarter of 2022 exceeded the average for the period by more than $1.1 billion.

This helped to take the outstanding cat bond market to a new record high of $38.2 billion, as of the end of June.

We view this as a particularly strong result for a market that has been dealing with pressures from the macro-environment and its effects on broader capital markets and investor appetite.

All of our catastrophe bond market charts and visualisations are up-to-date, so include this latest quarter of issuance data.

We’ll keep you updated on all catastrophe bond and related ILS transaction issuance as 2022 progresses, as well as evolving trends in the cat bond, insurance-linked securities (ILS) and collateralised reinsurance market.

For full details of first-quarter 2022 cat bond and related ILS issuance, including a breakdown of deal flow by factors such as perils, triggers, expected loss, and pricing, as well as analysis of the issuance trends seen by month and year.